The Economic and Social Research Institute says the Government should aim for a more rapid reduction of the budget deficit, eliminating it entirely by 2014, through more spending cuts and increased taxes.
It also says a European solution is needed to relieve Ireland of much of the costs of the banking crisis.
The ESRI says national income will grow by 0.5% this year, led by exports, with particularly strong export growth now showing in Irish owned companies.
The institute says Irish owned firms in traditional sectors like food and drink are now seeing very strong export growth.
Service exports are also forecast to enjoy another year of strong growth.
It says the best way for the government to help support this export growth is to reduce the cost burden on firms.
It also argues for a comprehensive property tax and water charges which would, it says, would provide additional funds without many of the disincentives effects associated with other taxes.
